6. Simple as ABC – the Austrian Business Cycle

The Austrian economists showed that when banks created credit from nothing, and lent it out, they caused business people and entrepreneurs to form incorrect judgements about the economy, and led them to make bad investment decisions.

This created the boom effect we like, and also caused the bust, which we don’t like.

Eventually, if the banks don’t stop issuing this credit, this boom/bust economy has a final disastrous manic boom, followed by the final bust.

The USA seems to be approaching this final bust.

Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.~Irving Fisher, Ph.D. in economics, Oct. 17, 1929

We’ve got no money, so we’ve got to think.~Ernest Rutherford

There will be no interruption of our permanent prosperity.~Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928